The first case of Coronavirus in West Virginia occurred on Tuesday, March 17th, meaning the virus has now impacted all 50 states. With the number of confirmed cases of COVID-19 climbing in the United States, President Donald Trump announced Wednesday afternoon that his administration is ramping up its response to the virus through invoking the Defense Product Act. President Trump said the following in response to invoking the Defense Product Act, “It can do a lot of good things, if we need it, and we will have it all completed, signing it in just a little while.”
What is the Defense Production Act?
According to the FEMA website, The Defense Production Act (DPA) is the primary source of Presidential authority to expedite and expand the supply of resources from the U.S. industrial base to support military, energy, space, and homeland security programs. Inspired by the First and Second War Powers Acts of 1941 and 1942, the DPA is a United States Federal Law enacted on September 8, 1950 which granted the executive branch with broad authority to regulate industry to meet the needs of national defense. At the time, the DPA allowed President Harry Truman to marshal the private sector to ramp up production of certain supplies in response to the Korean War. Since the enactment of the DPA, the interpretation has included assistance in times of war as well as responses for domestic emergency preparedness, like coronavirus, and recovery from terrorist attacks and natural disasters through guidance under the Stafford Act.
How Does the Defense Production Act Impact Government Contractors?
Under the DPA, President Trump has the granted authority to require companies to produce equipment or products necessary for national defense, or in this case crisis resolution. This is important to note as government contractors will need to meet the demand to provide medical supplies and equipment to deal with coronavirus. The DPA is an important tool the federal government can use to combat COVID-19 through expanding and expediting national production of needed medical supplies. In President Trump’s executive order calling to invoke the Defense Production Act, it is stated that Health and Human Services Secretary, Alex Azar, will responsible for issuing government purchase orders and contracts related to coronavirus, and may "adopt and revise appropriate rules and regulations as may be necessary to implement.”
The U.S. government, under the guidelines of the DPA, has the full ability to step to the front of the line ahead of other customers when purchasing needs associated with emergency preparedness, as well as direct companies to produce supplies as needed for the fight against coronavirus. If your company is looking to provide support to the government in response to COVID-19, you should keep in mind that the supplies or services you are providing may be subject to DPAS-rated orders. A DPAS-rated order is a prime contract, a subcontract or a purchase order in support of an approved program issued in accordance with the provisions of 15 CFR 700. Under the DPA, the executive branch may apply a priority rating to its contracts to ensure that their demand is met over any prior commitments to commercial partners. While companies have the ability to reject DPAS-rated order for reasons outlined in the regulations, it is important to mention that willful failure to perform a DPAS-rated order is a criminal violation that could result in imprisonment up to one year and a fine of up to $10,000.
Next Steps and How to Support the Government
While there is a lot of uncertainty of how the coronavirus will continue to impact our everyday lives, contractors can play a vital role in supporting the government’s response. If your company has a GSA/VA contract, you will be the governments go-to supply source for the immediate future. Now that the DPA has been invoked, it is important to know how you can make in impact against COVID-19 in these challenging times. If you would like more information on the DPAS, please check out the DPAS training course provided by the Department of Commerce or contact our team of experts today to see how you can support the fight against the coronavirus.
